Australia’s inflation has hit 4.2. per cent, with food prices, rising by 5.7 per cent in the 12 months to the end of March.

The Australian Bureau of Statistics reported today that its consumer price index rose by 1.3 per cent in the March quarter, to produce a 4.2 per cent all groups rise over the year.

The Reserve Bank does not use the raw CPI figure, as a basis for adjusting interest rates. It makes its own calculations, based on the CPI, to produce trimmed mean – and other – figures for that purpose.

But the Bureau’s calculations show, quite clearly, that Australia’s inflation rate, on any commonly used measure, is now well above the bank’s target range of 2-per cent, over the course of a business cycle.

The bank has said, at times, that it might not be too worried if inflation did rise above 3 per cent, temporarily.

But this is – definitely – not one of those times.

Recent statements, by the Reserve Bank, leave no doubt that it is, at present, deeply worried about Australia’s high inflation, even though it has said it expects this to ease over the year ahead.

Even so, it is not likely to order another interest rate rise, when it meets on the first Tuesday of next month.

That’s because the US credit crunch is, very effectively, doing the bank’s work for it.

Credit has become much tighter – and more expensive – as the effects of US troubles spread.

The bureau’s figures showed that Australia’s transport and financial services costs both leapt by 6.8 per cent over the past year.

This reflected the impact of rising fuel costs and higher interest rates.

And, the latest indicators suggest, there is worse to come on both fronts.

Crude oil futures leapt to almost $US120 a barrel overnight.

And, even if official interest rates don’t rise, commercial interest rates still will.

That has hit both business and consumer credit in Australia, very hard.

This – alone – is now protecting this country from another rate rise.